Here’s a tax break you might not have considered: Your business could be eligible for a tax credit for money you spend to meet the requirements of the Americans with Disabilities Act. The law requires companies with 15 or more employees to make reasonable accommodations in the workplace for disabled employees. (Reasonable accommodations must be made on a case-by-case basis and are not required when the cost would cause an undue hardship.)
Eligible small businesses can claim a credit equal to 50% of qualifying expenditures made during the year that exceed $250 but are less than $10,250. To take the credit, you must have either:
- Gross receipts of $1 million or less.
- Thirty or fewer full-time employees.
You can take the credit each year money is spent to make your workplace accessible. Changes that can result in a credit include:
Removing architectural, communication, physical, or transportation barriers that prevent your business from being accessible to, or usable by, disabled individuals.
Providing qualified interpreters or other effective methods of making aurally-delivered materials accessible to hearing-impaired individuals.
Supplying qualified readers, taped texts and other effective methods of making visually delivered materials available to the visually impaired.
Acquiring or modifying equipment or devices for disabled individuals.
More Relief: The tax code also provides a business deduction of up to $15,000 for costs incurred in removing architectural and transportation barriers to provide better access for the disabled or elderly to a facility or a public transportation vehicle owned or leased in connection with a trade or business.
Disabled Access Credit: One Obstacle
Expenses must be “reasonable and necessary “to qualify for the disabled access credit, according to an announcement made by the chief counsel of the IRS.
Furthermore, the credit is only available for expenses relating to physical access to a structure. For example, you can claim the credit for installing ramps and elevators that make it easier for disabled individuals to get around the business premises.
Now the IRS has determined that there is an additional requirement. Specifically, you cannot claim the credit for improving your company’s Web site to make it more accessible to disabled individuals.
Requirement: The small business must have a physical structure that the public enters in order to comply with the ADA. The IRS has determined that software expenses allowing visually-impaired or hearing-impaired individuals to access a company’s website don’t qualify. (IRS Chief Counsel Advice Memorandum 200411012).
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Councilor, Buchanan & Mitchell (CBM) is a professional services firm delivering tax, accounting and business advisory expertise throughout the Mid-Atlantic region from offices in Bethesda, MD and Washington, DC.
